Banker's Acceptance Law and Legal Definition

Banker's Acceptance or BA is a bill of exchange drawn on and accepted by a commercial bank. Banker's acceptances are considered to be safe assets because they allow traders to substitute the banks credit standing for their own. A banker's acceptance is often used to finance the sale of goods in international trade. Acceptances used in trade finance are eligible for Rediscount at a Federal Reserve Bank, and are not subject to Reserve Requirements. It is also termed as bank acceptance.